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Germany criticises US after Opel talks fall through

After a lengthy and, ultimately, inconclusive night of negotiations on the future of General Motors' European subsidiary Opel, the German government has criticised the United States and GM for pulling "unpleasant surprises" during the talks.

AFP - Germany hit out on Thursday at the US government and at General Motors for pulling "unpleasant surprises" during all-night talks in Berlin aimed at saving the US automaker's Opel unit.

Finance Minister Peer Steinbrueck and Economy Minister Karl-Theodor zu Guttenberg said that GM had put in an eleventh-hour request for an extra 300 million euros (415 million dollars) from the German government for Opel.

"GM again confronted us with new figures," zu Guttenberg told reporters after the talks in the German capital, with Steinbrueck calling it "pretty scandalous."

Zu Guttenberg also said that the US "could have made more of an effort" with its choice of representative at the discussions, which included GM as well as three firms bidding to buy a stake in the firm's European operations.

"We have made a fresh request to the US Treasury and we expect a response before Friday," he said, calling its input so far "marginal, to put it politely."

Steinbrueck also said that he did not want German government money to go "outside Europe's borders."

The talks were attended by representatives from GM as well as from three firms that have filed formal "letters of intent" in Berlin to buy stakes in GM Europe, which includes Opel in Germany and Vauxhall in Britain.

One result of the discussions was that now only a Russian-backed bid from Canadian auto parts maker Magna and a second from Italy's Fiat remain in the running.

Fiat, Magna and Brussels-based RHJ International had last week filed expressions of interest with the German government, which is offering billions of euros in loan guarantees to keep the company afloat.

Of the three offers for Opel, Canadian car parts maker Magna is seen as having the best chance of winning German approval, with unions and centre-left Social Democrat members of the governing coalition backing it.

It has teamed up with Russia's top bank, state-controlled Sberbank, for a bid that would see precious metals tycoon Oleg Deripaska's truck company GAZ making Opel vehicles in Russia.

Fiat wants to combine General Motors' European and Latin American operations with Chrysler, in which it has secured a 20-percent stake, to create the world's second largest automaker after Toyota of Japan.

Wednesday night's meeting was also aimed at agreeing on putting Opel in a trust to keep it operating with a 1.5-billion-euro (2.1-billion-dollar) government loan.

This model was given a boost on Wednesday by Opel's announcement that GM had transferred to it control of GM's European factories and its patents, allowing the firm still to operate in the event of a bankruptcy of the US giant.

"If GM goes bankrupt, we don't want the lights going out at Opel," Vice-Chancellor Frank-Walter Steinmeier, who is challenging Angela Merkel for the chancellorship in September elections, told reporters late on Wednesday.

GM employs 55,000 people Europe-wide, including around 7,000 in Spain, 4,700 in Britain at Vauxhall, 4,000 in Sweden at Saab, 3,600 in Poland, 2,600 in Belgium and 1,800 in Italy.

The German government came under attack from other European countries on Wednesday, with Britain and Belgium pressing Berlin not to strike a deal that would protect German workers at the expense of employees elsewhere.

The European Commission in Brussels called for a meeting of European finance and industry ministers on the issue "as soon as possible."

GM's bankruptcy was looking increasingly likely, meanwhile, with its announcement that it had failed to convince enough of its bondholders to accept a crucial deal that was a key element in its restructuring plans.

GM is widely expected to throw in the towel ahead of a June 1 deadline imposed by President Barack Obama's government, which has provided the automaker with billions of dollars in emergency loans.